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E X E C U T I V E S U M M A R Y O F T H E A N N U A L R E P O R T 2 0 1 6
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The EBA is tasked with contributing to, pro-
moting and monitoring the efficient, effective
and consistent
functioning of colleges of su-
pervisors
across the EU. The Colleges Action
Plan for 2016 considered the findings from the
monitoring of supervisory colleges in 2015,
incorporated relevant requirements based on
regulatory developments and benefited from
the EBA’s risk analysis work as well. The EBA
public report on the functioning of supervisory
colleges in 2016 concluded that, overall, the
level and quality of engagements in supervi-
sory colleges have been further improved in
the course of 2016, in particular the quality
and depth of the discussions.
Regarding the development of methodologies
for the
supervisory review
and evaluation pro-
cess, the EBA conducted the following tasks
in 2016:
The publication of the EBA Opinion on the
maximum distributable amount (MDA)
in
December 2015 provided clarity to supervi-
sors, banks and market participants for the
supervisory review process conducted in
2016. The opinion aimed to clarify the provi-
sions of Article 141 of the CRD which limit
the distribution of interim and year-end
profits in case of breaches of the combined
buffer requirement.
The EBA introduced the concept of the
Pil-
lar 2 Capital Guidance (P2G)
in July 2016 in
connection with the EU-wide stress test and
explained how additional ‘capital guidance’
can be used as a tool to address the quanti-
tative outcomes of the stress test.
The EBA published in November a set of
Guidelines on information related to
Inter-
nal Capital Adequacy Assessment Process
(ICAAP) and Internal Liquidity Adequacy As-
sessment Process (ILAAP)
that CAs should
collect from institutions for Supervisory Re-
view and Evaluation Process (SREP) purpos-
es. These Guidelines facilitated the consist-
ent supervisory assessment of internal risk
assessment models developed by banks, the
reliability of ICAAP and ILAAP capital and
liquidity estimates, their use in the assess-
ment of institutions’ capital and liquidity ad-
equacy, and the determination of additional
own funds and liquidity requirements.
The growing importance and increasing
complexity of
information and communica-
tion technology (ICT) risk
within the bank-
ing industry and in individual institutions led
the EBA to develop its own-initiative draft
guidelines addressed to competent authori-
ties to promote common procedures and
methodologies for the assessment of ICT
risk. The consultation paper was published
in October 2016.
Interest rate risk in the banking book
(IRRBB)
is an important financial risk for
credit institutions, which has traditionally
been considered under the supervisory re-
view process. In order to communicate ex-
pectations regarding the management of
IRRBB, in 2015 the EBA published guide-
lines on the management of IRRBB, which
were updated in April 2016.
In 2016, the EBA staff continued to provide
support to the
recovery-planning activities
carried out in colleges of supervisors, con-
tributing to the assessment of group recovery
plans, especially on the aspect of the cover-
age of individual entities in the group recovery
plans, and facilitating the discussions on re-
covery planning during supervisory colleges.
In July, a comparative report on the govern-
ance arrangement and recovery indicators
was published, based on the analysis of 26
plans of large European cross-border bank-
ing groups.